Scottish businesses are losing an estimated £664 million a year in revenue as a result of an over-reliance on a small number of suppliers and customers, a study suggests.

KPMG said as a result, firms leave themselves exposed to price increases, quality control issues and bad debt.

The business advisors surveyed 220 UK companies generating turnover in excess of £10 million, and 41 per cent of respondents flagged concerns about their reliance on key suppliers and 38 per cent said they had problems with suppliers last year.

Half of respondents said the threat of losing large customers was their “most pressing day-to-day concern”. Phil Charles, head of KPMG Enterprise in Scotland, said: “Our research suggests that in their pursuit for growth, these leaders are leaving the back door open by failing to adequately address the many and varied risks that threaten their business.

“Whether related to customers, suppliers, data security or regulation, never has the adage 'fail to prepare, prepare to fail' rung more true - and the financial impact that this lack of preparation is having on business is startling.

“Relying on a small pool of suppliers is a particularly common vulnerability amongst middle market companies, yet we've seen many high-profile examples of organisations that have taken a substantial financial hit as a result of a fracture in their supply chain.

“And these fractures aren't solely caused by suppliers going bust.

“Ethical lapses such as poor working conditions, data security breaches, substandard production, a flouting of environmental regulations or irregular financial transactions can all translate into significant reputational - and ultimately financial - damage to the contracting business.”